TMI Blog2022 (7) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor. Therefore, since there is nothing on record to suggest that the respondent no. 6 is a related party then the relevant time period would be one year prior to commencement of CIRP and thus, the alleged transactions are outside the purview of Section 43 of the Code in respect to the Respondent No. 6. On going through the each and every transaction submitted by the Resolution Professional, and after elaborate examination it is seen that the impugned transactions are preferential transactions, except in respect of respondent no. 6 as defined in the sub-section 2(a) of Section 43 of the IBC as these transactions have been executed within the look back period of two years before the commencement of Insolvency proceeding and are therefore covered under section 43(4)(a). Further the transaction mentioned in para 6 above are therefore held to be undervalued transactions in terms of Section 45 of the Code and Transaction as explained in para 7 are held to be fraudulent transactions as defined under Section 66 of the Code. The Respondents, except respondent no. 6, are hereby directed to pay the amounts as explained in para 5, 6 and 7 to the corporate debtor within 30 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock was old/obsolete and simultaneously using the same for drawing power calculation year by year. ii. The corporate debtor has failed to provide substantial evidence to prove the genuineness of sale and purchase transactions including movement to stocks during the audit period. Along with that such sale purchase were found to be done with various parties having common registered address, cancelled GST registration and nonexistence of parties shows malicious intention of the Corporate Debtor. iii. The Corporate debtor has intentionally sold/transferred its fixed assets at loss through booked entries to keep them out of the reach of secured creditors. Further, there was no substantial evidence to justify the same was available on record. iv. In our opinion it is evident that the corporate debtor has deliberately made the above stated transactions to defraud the creditors. The corporate debtor has not been able to justify the sale of goods/stock at lower process merely by stating that the stock was old/obsolete. 5. The applicant has submitted section wise details of avoidance transactions as the same was mentioned in the transaction audit report. Party wise det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Tax Audit report of FY 2018-19 the same was not shown under the repayment of loans/deposits. The said transactions were not done in ordinary course of business and not to be considered as preferential transactions. V. Hinglaj Enterprises- It was observed that the Corporate Debtor has adjusted receivable balance of Rs. 14.40 Lakhs receivable from various parties, against the opening payable balance of Hinglaj Enterprises during period under audit. However, the repayment of Rs. 5.77 Lakhs is done/adjusted during the 2 years preceding CIRP date i.e. 04.12.2019. It was observed that the said opening payable balance as on 01.04.2017 was consist of unsecured loan which was taken from the party during the FY 2014-15 and the Corporate Debtor has shown this unsecured loan under the head Sundry Debtors in the books of accounts. Further, the above said adjustments/repayment of loan made during the period under Audit was not shown in the Tax Audit Report. Further, it was also observed that the information such as address, contact details and the name of the proprietor are not available on record, hence, the same were not verified with respect that whether, the party is related or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 889 quintal of rice at average sales rate of Rs. 3670.52 per quintal amounting to Rs. 32.63 Lakh. The Corporate Debtor has booked loss of Rs. 7.06 Lakhs by selling 889 quintals of Rice and the cost value of stock was Rs. 4464.76 per are quintal. The amount of undervalue transactions is Rs. 7.06 Lakhs, without considering the profit element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45. IV. Kanha Rice and Paddy Traders- The Corporate Debtor during the review period has made sales of 612.26 quintal of Rice at average sales rate of Rs. 2618.84 per quintal amounting to Rs. 16.03 Lakh. The Corporate Debtor has booked loss of Rs. 11.30 Lakhs by selling 612.26 quintal of Rice. The cost value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 11.30 Lakhs, without considering the profit element. The suspended director has purposely done these undervalue transactions to tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the same address which is 3973/74, 3rd Floor, Naya Bazar, New Delhi-110006. Fraudulent transactions under Section 66 as per details is hereby reproduced:- I. Sansar International- The Suspended directors during the review period has made sales of Rs. 758.90 Lakhs and Purchase of Rs. 359.65 Lakhs during the review period. The amount adjusted in the sale/purchase is Rs. 359.65 Lakhs without any bank transactions. The sales and purchase transactions are entered by the suspended directors without any movement of goods and only for purpose of inflating the sales/purchase and also write off the non-existence stock from the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors. II. Cap Commodities House- The Suspended has made sales of Rs. 156.75 Lakhs and Purchase of Rs. 96.31 Lakhs during the review period. The amount adjusted in the sale/purchase is Rs. 21.75 Lakh without any bank transactions. The sales and purchase transactions are entered by the suspended directors without any movement of goods and only for purpose of inflating the sales/purchase and also write off the non-existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that the Corporate Debtor has made purchases of Rs. 5.80 lakhs during the month of April-2017, and Rs. 2.72 lakhs have been paid against the purchases made. It was also observed that the Corporate Debtor has made sales of Rs. 3.08 lakhs and no amount has been received against the sales made. Further, it was observed that the Corporate Debtor has adjusted the total sales against the purchases made during the period. No GST number has been mentioned as per the books of accounts. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors. VIII. Kundan Trading Co.- It was observed by the Transaction Auditor that the suspended directors have made sales of Rs. 164.40 Lakhs, but no transportation details were given on the invoices. The enquiry letter was issued by the applicant/resolution professional, but no such party was found on the registered/available address. It was also observed that the GSTN number of the said party was found cancelled and the same got cancelled on 01.06.2019. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors. IX. R.K. Internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017-18 were available on record, therefore they were unable to verify the same. c) The report submitted that the transaction auditor report is incomplete as the same doesn't confirm to any accounting standards and not to be used in any legal proceedings. d) The respondent further denies the veracity of the ledger accounts of the Corporate Debtor pertaining what mentioned in the Annexure 11 of the Application. As the respondent has no knowledge of any of the transactions attributed to it and cannot be held liable for what is recorded by the Corporate Debtor in its books. e) The respondent states that they had purchased a total of five consignments of rice from the Corporate Debtor vide purchase orders dated 16-03-2014, 20-03-2014 and 24-03-2014. The consignments totalled was Rs. 38,89,552.50/-. (Rupees 38.89 Lakhs). f) It is the contention of the respondent that the relevant time-period for persons other than related parties as per Sec. 43(4)(b) is up to a period of one year prior to the insolvency commencement date. In the present matter, the insolvency proceedings commenced on 04-12-2019. Therefore, the relevant period for the purpose of Section 43 is from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Clause (J) of sub-section (2) of Section 25 casts duty upon the Resolution Professional (RP) to apply for the avoidance of any such transaction before the Adjudicating Authority. Section 66 casts duty on the Resolution professional to apply to the Adjudicating Authority in respect of fraudulent and wrongful transactions. 15. Further, sub-section (1) of Section 66 of the Code provides that if during the CIRP, it is found that any business of the Corporate Debtor has been carried on with the intent to defraud creditors of the Corporate Debtor or for any fraudulent purpose, the Tribunal may on application of the Resolution professional pass an order directing any persons who were knowingly parties to carry on the business in such manner shall be liable to make such contribution to the assets of the Corporate Debtor as it may deem fit. sub-section (2) of Section 66 states that if before the insolvency commencement date, a Director or partner know or sought to have known that there was no reasonable prospect of avoiding the commencement of Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor; and such Director or partner did not exercise due dilig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
